Worldcoin: Sam Altman's Eyeball Scanning for Crypto

The Race to Onboard the Next Wave of Crypto Users

As investment in cryptocurrencies surges, startups are innovating in their approaches to introducing a new generation to digital wallets.

Worldcoin represents a particularly ambitious attempt to incentivize global adoption of its currency. Founded by Sam Altman, CEO of OpenAI, and Alex Blania, the project aims to provide a crypto wallet – and associated currency – to every individual worldwide. However, achieving this necessitates a robust system for verifying unique human identity.

Worldcoin strives to establish a proof-of-personhood network in a manner that minimizes potential for dystopian outcomes. This involves scanning the irises of a billion people using a device known as “The Orb,” a five-pound chromatic sphere.

Addressing the Challenges of Online Identity

The internet’s structure is characterized by a complex network of users, including bots, individuals using real identities, and those employing pseudonyms or impersonations. This can lead to misaligned incentives, as demonstrated by contemporary social media platforms. In the realm of finance, such complexities can create opportunities for fraud and exacerbate inequalities.

Worldcoin seeks to mitigate these risks and ensure equitable currency distribution by guaranteeing that each person on Earth can only create a single wallet within its network.

Alex Blania, CEO of Worldcoin, explains to TechCrunch that the currency is part of a broader vision for a more unified and equitable global economy powered by the internet. He notes that existing cryptocurrencies have yet to fully realize this potential.

The Foundation of Worldcoin: A Layer 2 Solution

“[Worldcoin] originated from the belief that universal basic income will become increasingly vital, and that access to the internet economy will be even more important than currently understood,” Blania states.

The Worldcoin cryptocurrency is built as a “Layer 2” solution on the Ethereum blockchain, leveraging Ethereum’s security while maintaining its own independent economy. Blania highlights the strength of Ethereum’s developer network as a key reason for choosing this architecture, hoping for widespread adoption of Worldcoin within that community.

While some advocate for Bitcoin as the initial cryptocurrency experience for many, Blania identifies scalability concerns with Bitcoin compared to an Ethereum Layer 2.

“Bitcoin’s scalability is limited for billions of users,” Blania explains. “Transaction speeds are slow, resulting in high costs, as we are currently observing.”

Navigating Launch and Regulatory Hurdles

Early details of the company’s launch were reported by Bloomberg in June, a disclosure Blania acknowledges as “annoying.” He recognizes the complexity of Worldcoin’s undertaking and expresses confidence in the company’s ability to effectively communicate these intricacies to its global user base as it approaches launch.

Central to the onboarding process is The Orb.

The Orb: A Unique User Acquisition System

Worldcoin employs a notably rigorous user acquisition process, licensing Orb cameras to contractors globally. These contractors manually verify each new user in every city, country, and continent.

The core of the proof-of-personhood onboarding flow involves capturing an image of a person’s iris with the Orb. This image is then converted into a hash code – a process Worldcoin asserts is irreversible. The system checks a database to ensure the hash hasn’t been previously uploaded. If unique, the hash is saved, and the user can generate a wallet via the app, with the Orb scanning a QR code.

This creates a network of verified users linked to pseudonymous wallet codes, not real names, and a database containing hashes rather than actual eye images – privacy measures Blania emphasizes Worldcoin will clearly communicate during rapid user onboarding.

Scaling the Network and Future Prospects

Blania reports that contractors have successfully onboarded over 700 users per Orb per week during initial testing across South America, Asia, Africa, and Europe. Currently, 30 prototype devices are deployed, with plans to add hundreds more in the coming months, potentially scaling to thousands of Orbs per month. However, users in the U.S. may experience a delay in accessing Worldcoin’s Orb technology.

“We might postpone the launch in the United States until we have greater clarity regarding the regulatory landscape,” Blania notes.

The process is demanding, but establishing millions of users with their first crypto wallets while simultaneously building a verified internet user network via blockchain is a proposition many crypto investors find appealing. Upon launch, unique users will receive a share of the digital currency – the exact amount, whether a fixed rate or dollar-pegged, is still being finalized.

A total of 80% of the Worldcoin supply will be distributed to onboarded users, with 10% reserved for the company and the remaining 10% allocated to investors.

To prevent immediate liquidation of sign-up rewards, Blania states they will implement measures as the network scales and its utility expands.

Investment and Long-Term Vision

Worldcoin launched with $25 million in funding led by Andreessen Horowitz, with participation from Coinbase, Reid Hoffman, Day One Ventures, Multicoin, FTX’s Sam Bankman-Fried, and Variant’s Jesse Walden. The investment valued the company at $1 billion, though Blania suggests this valuation is less significant as the company and its intellectual property will eventually be transitioned into a foundation.

Investors are primarily seeking access to the 10% pool of investor capital within the Worldcoin token.

“The equity of the company itself should be largely irrelevant,” Blania says.

Challenges and Uncertainties Ahead

Attracting attention to a new cryptocurrency is a significant hurdle, as is onboarding billions of users and ensuring the proprietary hardware can accurately process billions of irises in diverse environments. Worldcoin faces substantial challenges, some of which may not become apparent until more Orbs are deployed. Access to investor capital can address some issues, but others will require clear communication regarding the complexities of the system.

The company’s launch blog succinctly captures the inherent uncertainty: “Nothing like this has ever been done before and the outcome is uncertain.”